It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)

Thursday, October 12, 2006

Ding Dong Monopoly

Bell Canada known as BCE owner of the Globe and Mail, CTV, Bell mobility, etc. has moved into the income trust business, in order to avoid taxes. The Toronto Star has an interesting take on this Curtain falls on flawed business strategy

Bell had a monopoly in Eastern Canada, built as it was on a contiental basis in the Eastern seaboard of the US and Canada. It never made it out west, due to expense and risk. So instead provincial governments and the City of Edmonton created competing phone systems.

In the case of Emonton Telephones it was a private company which was sold to the city in the early 20th Century. Alex Taylor took advantage of the fact that neither Bell nor Alberta Government Telephones saw fit to build a telephone line to the city. It later was sold to AGT in the ninties, wtoghether they became the privatized Telus, Bells largest competitor.

In order to have competition between monopolies they have to be large enough corporate behemoths to take each other on. Sort of like Gozilla versus Mothra, or the silent dinosaur movies of the twenties. The liberaltarians believe that a mythical state-free market would eliminate monopoly, it is a myth. The inherent drive of capital is to centralize itself and thus to create a state capable of allowing for monopoly and oligopoly. It does not want competition but centralization and collusion.

Telus has gone into creating an income trust fund so flush with capital that it needs to hide it under the bushel of this ponzi tax avoidance mechanism.

Bell on the other hand is bleeding capital, and as the Tor Star article points out going the income trust route is counter intuitive. Instead of investing capital for profit they are divesting themselves of profit in a trust which pays out high income to investors and managers.

Once again the capitalism shows it is not capable of operating an efficient system of production and distribution. Captial and the capitalist is always distracted by the next get rich quick scheme to maximizes it's profit from credit and interest.